Yup, to use Photomerge in CS2, choose File > Automate > Photomerge and then select the photos you want to merge and click the OK button. You can check the 'Attempt to Automatically Arrange Source Images' before clicking OK so that it does all the work for you, and if it gets the merge wrong then you can do the minor adjustments manually.

The above photo was made using the Auto option, I just checked the 'Perspective' option under settings to make the top half straight to get rid of that heavy panorama look.